Stock market today: S&P 500 climbs as health care, tech gain; Nvidia earnings loom
Investing.com -- Deepwater Asset Management Managing Partner and co-founder Gene Munster believes Wall Street’s growth estimates for Nvidia (NASDAQ:NVDA) in calendar year 2026 are too conservative ahead of the company’s upcoming earnings report.
In his preview, Munster suggests analysts will likely revise their CY26 outlook from the current 27% top line growth expectation to 30-35%, compared to 55% growth expected this year.
Munster addresses several "noisy" factors affecting Nvidia’s near-term performance, particularly regarding China. He expects about $5 billion in catch-up revenue will fall into the October quarter following the recent U.S. export license deal that requires Nvidia to share 15% of China revenue with the U.S. government.
To offset this revenue sharing arrangement, Munster predicts Nvidia will implement an 18% price increase on the new China Blackwell-based chip in January. This would help maintain gross profit dollars despite the government’s cut, though overall gross margins might dip slightly from 71% to about 69.3%.
For the July quarter, Munster notes that Street expectations are higher than they appear. Analysts expect 53% growth, but when adjusting for the estimated $8 billion in lost China revenue, the implied growth rate is around 79% - similar to the April quarter despite increasing revenue scale.
Munster highlights recent capital expenditure increases from major tech companies as evidence of continued strong AI investment. Meta has guided to approximately 47% capex growth for next year, while Amazon, Microsoft, and Alphabet are currently expected to increase capex by an average of 7%. Munster believes the latter three companies will eventually guide toward 25% capex growth for next year.
The analysis also points to Nvidia’s networking business as an underappreciated growth driver. Currently representing about 11% of total revenue, Munster projects this segment will grow to approximately 15% of revenue in five years, implying 20% annual growth compared to 10% for the GPU business.
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